Will Vehicle Prices Ever Decrease?

[Mike D Texas]

In the market right now. My wife and I have looked everything. Toyota, dodge, Chevy, ford, lexus, Acura, genisis, Mercedes, and BMW. They are all expensive.

I found a new 2024 4 runner trd pro and the dealer added $5k for market adjustment bc it’s the last of the v6 engine in the 4 runner. So, just because I can. .

$66k for a 4 runner.

(FYI, it’s the only new 4 runner I’ve found for 300 miles)

Everything we have looked at with options and features we want has been $55k and up.

The car we like the most is the bmw x5 but after talking to a bmw mechanic in Houston with 15-20 years of experience I was warned to lease it or stay away from it unless you get rid of it after 3 years or 35k miles. Otherwise it’s gonna really cost you. Gone are the days of tune ups and servicing them at 100k miles. He’s now doing it at 60-80k on models 2021 and newer. And apparently this is how the cars are being designed purposely.

Interest rates suck….

That’s new and used…

She currently drives a 2017 Toyota Camry that’s paid off and only has 85k miles on it. Only reason we are looking is bc we have our first baby on the way due January and wanted to put her in a bigger vehicle. The Lexus RX 350 just isn’t quite big enough and none of the domestic really hold value long term.

I have a 2020 tundra with 105k miles. Almost paid off with a $410 note and 1.5% interest rate. No idea what I’m going to do when I need a new truck. Toyota did away with the 5.7 V8 for a stupid turbo v6. Not impressed with it either. And get this…

Dodge is doing away with the HEMI. Yes, you read that right…. Why, might you ask? For hybrids and electric. All for some bullshit emissions regulations….

Can my wife and I afford new cars today? Yes, quite easily.

Do we want to? Absofreakinglutely not!

This is out of hand…

My most solid advice to everyone…

GO VOTE!!!!!


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We have an RX-L and can easily carry us + 4 grandkids.

However if I were buying new today I would pick the newer TX instead of the RX.


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[*zap*]

wow 50k miles on a 20+ y/o truck, sounds like a great barn find! you could probably sell it and double $ tomorrow.

i could probably get 8-9k for it but I am planning to keep it for a while. Purchased from Nebraska nat guard.

 

[HuntHarder]

Corbland- You gotta watch all those incentive interest rates. They are usually in lieu of dealer discounts or only on certain trims or motors.

In June I purchased a new pickup. I paid cash, but ended up having to finance it for a few days to get the "finance incentive". It was stupid, but in the end saved me $2500.00 to finance and pay it off when it first showed in my account. My credit score was 870 ( I did not even know it went this high, but apparently there are other institions that go to 900 now) and they offered me 6.9%. The payments now a days are ridiculous and keep making Americans broker by the month.

 

[CorbLand]

Corbland- You gotta watch all those incentive interest rates. They are usually in lieu of dealer discounts or only on certain trims or motors.

In June I purchased a new pickup. I paid cash, but ended up having to finance it for a few days to get the "finance incentive". It was stupid, but in the end saved me $2500.00 to finance and pay it off when it first showed in my account. My credit score was 870 ( I did not even know it went this high, but apparently there are other institions that go to 900 now) and they offered me 6.9%. The payments now a days are ridiculous and keep making Americans broker by the month.

Yes, I didnt go looking for some obscure thing though. I ran those based on what the average person is most likely going to go buy.

If you need something specific, then you are stuck with whatever works for that specific item but lets be honest here, the vast majority of us would be perfectly fine with any of the half tons on the market today.

I kind of figured that most would be smart enough to look at dealer discounts and the interest rate and determine what would be better for them .But that doesnt really matter as this was in direct response to interest rates.

 

[CorbLand]

i could probably get 8-9k for it but I am planning to keep it for a while. Purchased from Nebraska nat guard.

I dont blame you, that is a hell of a find.

 

[mlevimadden]

Where are you guys seeing the 8-10% interest rates that have been stated in this? Most autoloans I have seen are in the low to mid 6s and you can get dealership loans on brand new for as low as 3%.

Honestly, I don't pay attention to auto loan interest rates, so I probably should have left that out of my post. For my post above, I just did a simple google search, so your numbers are probably more accurate.

https://www.experian.com/blogs/ask-experian/average-car-loan-interest-rates-by-credit-score/

5.25-15.77% based on credit score, so I split the difference and adjusted low.

Maybe it's way off, but I really wanted to focus on the second caveat I listed anyway, as it's still true regardless of the current interest rates. I see it frequently as something people (often with low or negative net worths) use to justify a vehicle purchase that they would never even consider if they had to pay cash for.

I do have a close friend who is well into millionaire status in his younger 30's and financed a used, base model Honda CR-V when interest rates were low. I think he bought the car for $20k and could have withdrawn investments and bought 20 of them with cash but financed it to keep his money in the market. He is an extremely frugal person and definitely the exception.

In my eyes this is night-and-day different from the average person convincing themselves that somehow they are making a smart financial decision by financing a $60k brand new SUV to tote around 1 child in, rather than paying cash for a 3-5 year old, used, reliable $20k vehicle that would satisfy all their needs and leave them way ahead financially.

 

[Jason Snyder]

In my eyes this is night-and-day different from the average person convincing themselves that somehow they are making a smart financial decision by financing a $60k brand new SUV to tote around 1 child in, rather than paying cash for a 3-5 year old, used, reliable $20k vehicle that would satisfy all their needs and leave them way ahead financially.

I completely agree with all of this except the last part. Why not invest the cash and finance the vehicle?

We drove used for a couple of decades. My wife got her first brand new car since 1997 last year, and that’s because the price of lower mileage RAV4s was silly.

 

[mlevimadden]

I completely agree with all of this except the last part. Why not invest the cash and finance the vehicle?

We drove used for a couple of decades. My wife got her first brand new car since 1997 last year.

Fair question, and the last part is a personal decision on my part, so different strokes for different folks.

From a math standpoint you're right, financing the vehicle is a better option if you actually invest the other funds in a high return investment. Maybe you're like my close friend (and it sounds like you are) and are able to not overspend on a vehicle regardless of whether you're paying cash, and disciplined enough to keep that remaining money invested.

The average American consumer just isn't this disciplined with vehicle purchases, honestly I don't know if I'm that disciplined, so I force myself to pay the cash.

But when you're talking about a 10% return vs 6% loan on $20k, we're talking about a couple hundred bucks a month of outperformance. Even less of a difference if you account for only carrying liability insurance on the cash-owned vehicle. That plus the financial risk of carrying the loan on a depreciating asset doesn't make it worth it for me personally.

I don't think missing out on that $200/mo is going to significantly impact someone's ability to build wealth. Whereas missing out on years of home ownership trying to save a huge down-payment, and never owning rental properties unless you can afford it in cash, does make people miss out on life-changing wealth. That's why I lean more towards the Ramsey method on vehicles, but lean away from him on actually building wealth.

 

[CorbLand]

Honestly, I don't pay attention to auto loan interest rates, so I probably should have left that out of my post. For my post above, I just did a simple google search, so your numbers are probably more accurate.

https://www.experian.com/blogs/ask-experian/average-car-loan-interest-rates-by-credit-score/

5.25-15.77% based on credit score, so I split the difference and adjusted low.

Maybe it's way off, but I really wanted to focus on the second caveat I listed anyway, as it's still true regardless of the current interest rates. I see it frequently as something people (often with low or negative net worths) use to justify a vehicle purchase that they would never even consider if they had to pay cash for.

I do have a close friend who is well into millionaire status in his younger 30's and financed a used, base model Honda CR-V when interest rates were low. I think he bought the car for $20k and could have withdrawn investments and bought 20 of them with cash but financed it to keep his money in the market. He is an extremely frugal person and definitely the exception.

In my eyes this is night-and-day different from the average person convincing themselves that somehow they are making a smart financial decision by financing a $60k brand new SUV to tote around 1 child in, rather than paying cash for a 3-5 year old, used, reliable $20k vehicle that would satisfy all their needs and leave them way ahead financially.

If someone is smart enough to play the interest rate game (and I mean they truly are playing it, not justifying financing) it is safe to assume that they are going to be in the lower bracket of interest rates. Especially when they are debating between paying cash and financing. Not many people with 300 credit scores sitting on 60,000.00 in cash.

You are kind of changing the parameters on what was originally being discussed which is the difference between financing a vehicle and paying cash for a vehicle. Now you are throwing in the buying new vs buying used.

Jason's response was to someone saying if you finance a vehicle you cant afford it. Jason was saying that is not true because you can finance things, to keep your money in places that are earning higher interest than you are paying.

While that is harder to do today then it was a couple years ago, it is still very possible. Of the interest rates I posted, you could make more in about 50% of them and some of those being half of what Tbills and/or HYSA are earning you right now.

Based on the interest rates that allow for this. If you had 60K to buy a brand new vehicle, you could finance the entire thing, put all 60,000.00 in a HYSA and make your payment out of that each month. You are earning more interest than you are paying and money ahead. If something happened and you needed to pay that vehicle off, you simply take all the money out of your HYSA and pay it off. It is literally zero risk and all gain.

If you dont have the self control to do this, then its not a good method for you and you need to do what fits you but that doesnt make any of it untrue.

 

[Jason Snyder]

I’m nearing retirement and looking at whether it makes sense to buy 1) new 2) low miles used or 3) keep fixing what I have for a pickup.

I’m fairly certain my best financial choice is to keep fixing what I have, as it breaks. I’m mixed in which way to go. Honestly, if I could rewind the clock back to February 2020, I would’ve bought a brand new tundra at that time. Instead of buying used.

What is ironic and humorous is the disparity in opinions on this. I bet more than one person who advocates never buying more vehicle than you NEED has way more guns in their safe than they use or need (myself included).

At the end of the day, it’s your money. Choose wisely.

 

[mlevimadden]

If someone is smart enough to play the interest rate game (and I mean they truly are playing it, not justifying financing) it is safe to assume that they are going to be in the lower bracket of interest rates. Especially when they are debating between paying cash and financing. Not many people with 300 credit scores sitting on 60,000.00 in cash.

You are kind of changing the parameters on what was originally being discussed which is the difference between financing a vehicle and paying cash for a vehicle. Now you are throwing in the buying new vs buying used.

Jason's response was to someone saying if you finance a vehicle you cant afford it. Jason was saying that is not true because you can finance things, to keep your money in places that are earning higher interest than you are paying.

While that is harder to do today, then it was a couple years ago, it is still very possible. Of the interest rates I posted, one could make more in about 50% of them and some of those being half of what Tbills and HYSA are earning you right now.

I don't disagree with any of this, and I don't think I ever replied to Jason before he quoted my last post, in which we agreed. I definitely never said "if you finance a vehicle you can't afford it". There are plenty of times where financing does make sense, especially for new vehicles being used as a business or farm expense. And I replied to Jason above acknowledging that financing usually does make mathematical sense, so I don't think we are even disagreeing here.

 

[Wyo_hntr]

I’m nearing retirement and looking at whether it makes sense to buy 1) new 2) low miles used or 3) keep fixing what I have for a pickup.

I’m fairly certain my best financial choice is to keep fixing what I have, as it breaks. I’m mixed in which way to go. Honestly, if I could rewind the clock back to February 2020, I would’ve bought a brand new tundra at that time. Instead of buying used.

What is ironic and humorous is the disparity in opinions on this. I bet more than one person who advocates never buying more vehicle than you NEED has way more guns in their safe than they use or need (myself included).

At the end of the day, it’s your money. Choose wisely.

I don't know the details of your situation, but I bet you'd be better off saving as much money you can for any possible repairs/maintenance than buying new. New prices are insane to me these days. Add to that it seems most manufacturers are experiencing issues with recalls or tsb's.

For reference I drive a 2017 year pickup with 88k miles and only have two hunting rifles.

 

[CorbLand]

I don't disagree with any of this, and I don't think I ever replied to Jason before he quoted my last post, in which we agreed. I definitely never said "if you finance a vehicle you can't afford it". There are plenty of times where financing does make sense, especially for new vehicles being used as a business or farm expense. And I replied to Jason above acknowledging that financing usually does make mathematical sense, so I don't think we are even disagreeing here.

You responded to ddavis post. Ddavis post was saying that Jason was right. Your post said "he is right but...." That "he" would have been Jason.

I am actually not disagreeing with or arguing with you on this. Just stating that interest rates are not what you said they are and if you use the actual interest rates (again, assuming that anyone that is truly playing the game will be in the lower bracket), one is money ahead by financing.

 

[CorbLand]

I’m nearing retirement and looking at whether it makes sense to buy 1) new 2) low miles used or 3) keep fixing what I have for a pickup.

I’m fairly certain my best financial choice is to keep fixing what I have, as it breaks. I’m mixed in which way to go. Honestly, if I could rewind the clock back to February 2020, I would’ve bought a brand new tundra at that time. Instead of buying used.

What is ironic and humorous is the disparity in opinions on this. I bet more than one person who advocates never buying more vehicle than you NEED has way more guns in their safe than they use or need (myself included).

At the end of the day, it’s your money. Choose wisely.

How reliable is the current one? It is usually cheaper to fix than buy new or even new to you but your opinion of what is better for you usually changes when you got a long walk back to a paved road.

 

[Jason Snyder]

How reliable is the current one? It is usually cheaper to fix than buy new or even new to you but your opinion of what is better for you usually changes when you got a long walk back to a paved road.

Actually it’s very reliable. 70k plus miles of ownership and nothing but maintenance items. It has all the tech I want or need with heated seats and a CarPlay head unit.

However, in five years I’ll probably have about 240k miles on it. Not outrageous at all for a Toyota, but I would also rather buy a new/newer used while I’m still working and can pick up some overtime to get it paid off earlier.

 

[Jason Snyder]

I don't know the details of your situation, but I bet you'd be better off saving as much money you can for any possible repairs/maintenance than buying new.

Quite possibly.

I reduced my inventory via Gunbroker about 5 years ago. It might shrink even more.

 

[ddavis_1313]

He's right from a purely mathematical standpoint, with several BIG caveats.

1. Vehicle interest rates are like 8% right now for new, I'm not aware of a single investment option with a guaranteed return that beats that rate. Sure the market averages 11% but not guaranteed, especially over short stretches.
2. You only come out money ahead if you buy the exact same vehicle you were going to pay cash for. Would you honestly even be considering a $60k TRD Pro 4R if you had to shell out the cash?

I'm heavily skewed as someone who only buys used vehicles for cash, with the most expensive one being $30k.

But I am not at all against debt for appreciating assets, and put my money where my mouth is with close to $1M currently of "good debt" on income-generating real estate.

Also, have you honestly self-reflected on why do you need the TRD Pro trim level?

I don’t need the trim level. It’s the only one available. I think the price is stupid.

This thread is titled “will vehicle prices ever come down”. I posted a price of a vehicle that is imho priced too high.


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[ddavis_1313]

We have an RX-L and can easily carry us + 4 grandkids.

However if I were buying new today I would pick the newer TX instead of the RX.


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Haven’t had a chance to test drive the tx. They have a stop sale on them..


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[CorbLand]

Actually it’s very reliable. 70k plus miles of ownership and nothing but maintenance items. It has all the tech I want or need with heated seats and a CarPlay head unit.

However, in five years I’ll probably have about 240k miles on it. Not outrageous at all for a Toyota, but I would also rather buy a new/newer used while I’m still working and can pick up some overtime to get it paid off earlier.

If you are asking what I would do, I would start making a payment into a savings account now. Work OT like your trying to pay it off and drive your current one till you cant anymore or its no longer reliable. It may still be running like a top at 240K. Push come to shove, you got money in the bank to buy a new one.

But I have also learnt that sometimes its better to do things when you can instead of waiting and hoping things get better or better deal comes along.

Advantage you have, you dont HAVE to have one now and that is the best time to be looking.

Tough call.